Migration and Development. Armenia Country Study

111 Pages·2009·1.55 MB·English

International Labour Organization

Migration and Development

Armenia Country Study

Yerevan 2009
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Migration and Development. Armenia Country Study, ILO, 2009. ILO Subregional Office for Eastern Europe and
Central Asia, 2009.
ISBN 978-92-2-122912-4 (Cd-ROM)
ILO Cataloguing in Publication Data
Migration and Development. Armenia Country Study / ILO Subregional Office for Eastern Europe and Central Asia,
International Labour Office. - Moscow: ILO, 2009
labour migration / international migration / migrant worker / migration policy / Armenia
14.09.2
Also available in Armenian: ØÇ·ñ³óÇ³Ý ¨ ½³ñ·³óáõÙÁ .г۳ëï³ÝáõÙ ³éϳ Çñ³íÇ׳ÏÇ
áõëáõÙݳëÇñáõÃÛáõÝ ISBN: 978-92-2-822912-7 (Cd-ROM)

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Acknowledgments

The study has been prepared in the framework of the project “Towards Sustainable Partnerships for
the Effective Governance of Labour Migration in the Russian Federation, the Caucasus and Central Asia”
financed by the European Union (EU).
Chapters 1 and 2 have been prepared by Anna Minasyan (Advanced Social Technologies – AST). Chapter
3 has been drafted by Ruben Yeganyan (national expert). Chapter 4 has been jointly prepared by AST,
Krishna Kumar (international expert) and Nilim Baruah (ILO). This report has been supervised by Nilim
Baruah, ILO. Anush Aghabalyan, ILO Yerevan, provided comments as well as administrative support to
preparation of the draft.
Survey data on Return has been provided by an on-going study commissioned by OSCE, Yerevan.

Views expressed in the report are those of the authors and contributors and do not necessarily represent
those of the ILO or EU.
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Table of contents
EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY ........................................................................................................................................ 1
IINNTTRROODDUUCCTTIIOONN ..................................................................................................................................................... 5
CCHHAAPPTTEERR 11:: TTRREENNDDSS AANNDD PPAATTTTEERRNNSS IINN EEMMIIGGRRAATTIIOONN AANNDD RREETTUURRNN ............................................. 6
1.1. GENERAL OVERVIEW OF EXTERNAL MIGRATION FLOWS ........................................................ 6
1.2. LABOUR MIGRATION .............................................................................................................................. 7
1.2.1. LABOUR MIGRATION RATES AND DESTINATIONS .............................................................................. 7
1.2.2. SOCIAL-DEMOGRAPHIC PROFILE OF THE LABOUR MIGRANTS ............................................................ 8
1.2.3. MOTIVATION TO MIGRATE ................................................................................................................... 9
1.2.4. ORGANIZATION OF MIGRATION ......................................................................................................... 10
1.2.5. LENGTH OF STAY ABROAD ................................................................................................................. 10
1.2.6. OCCUPATION IN THE DESTINATION COUNTRY ................................................................................. 11
1.3. RETURN ..................................................................................................................................................... 12
1.3.1. RETURN STATISTICS .......................................................................................................................... 12
1.3.2. SOCIAL-DEMOGRAPHIC PROFILE OF THE RETURNEES ...................................................................... 13
1.3.3. MOTIVATION TO RETURN .................................................................................................................... 15
1.3.4. EXPERIENCE AND SKILLS ACQUIRED ABROAD .................................................................................. 16
1.3.5. CONTRIBUTION OF THE RETURNEES IN TERMS OF INVESTMENTS, JOB CREATION, BUSINESS
DEVELOPMENT, TECHNOLOGY AND SKILLS TRANSFER ....................................................................................... 17
1.4. CONCLUSIONS ........................................................................................................................................ 17
CCHHAAPPTTEERR 22:: EEMMIIGGRRAATTIIOONN OOFF SSKKIILLLLEEDD HHUUMMAANN RREESSOOUURRCCEESS ........................................................... 18
2.1. LABOUR DEMAND .................................................................................................................................. 18
2.2. GENERAL OVERVIEW OF LABOUR RESOURCES. ECONOMIC ACTIVITY AND
EMPLOYMENT IN ARMENIA ............................................................................................................................. 21
2.3. SKILLED LABOUR: FACTS AND FIGURES ..................................................................................... 23
2.4. CONCLUSIONS ........................................................................................................................................ 41
CCHHAAPPTTEERR 33:: RESPONSE OF THE ARMENIAN EDUCATION SYSTEM TO SIGNALS FROM THE
LOCAL AND GLOBAL LABOUR MARKETS .................................................................................................... 43
3.1 PROFESSIONAL EDUCATION IN ARMENIA ............................................................ 43
3.1.1. BASIC PROFESSIONAL EDUCATION (BPE) AND SECONDARY PROFESSIONAL EDUCATION
(SPE) 44
3.1.2. HIGHER AND POST-GRADUATE PROFESSIONAL EDUCATION ..................................................... 48
3.2. SURVEY OF EXPERTS OF ARMENIAN PROFESSIONAL EDUCATION .......................... 54
3.2.1 THE AIM AND METHODOLOGY OF THE SURVEY ............................................................................. 54
3.2.2. THE NUMBER AND STRUCTURE OF RESPONDENTS ........................................................................ 54
3.2.3. ANALYSIS OF SURVEY RESULTS ......................................................... Error! Bookmark not defined.
3.3 FEEDBACK FROM EMPLOYERS AND RECENT GRADUATES TO THE ARMENIAN
EDUCATION SYSTEM .............................................................................................. 66
CCHHAAPPTTEERR 44:: RREEVVIIEEWW OOFF CCUURRRREENNTT AARRMMEENNIIAANN PPOOLLIICCIIEESS TTOO AATTTTRRAACCTT IINNVVEESSTTMMEENNTTSS,,
SSAAVVIINNGGSS AANNDD SSKKIILLLLSS,, AANNDD TTEECCHHNNOOLLOOGGIIEESS TTRRAANNSSFFEERR FFRROOMM MMIIGGRRAANNTTSS:: AASS WWEELLLL AASS
PPOOLLIICCIIEESS FFOORR RREETTUURRNN OOFF TTHHEE QQUUAALLIIFFIIEEDD AANNDD PPOOLLIICCIIEESS IINN SSEELLEECCTTEEDD CCOOUUNNTTRRIIEESS OOFF
OORRIIGGIINN .................................................................................................................................................................... 67
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4.1 KEY ACTORS IN THE ARMENIAN LABOUR MIGRATION FIELD ................................................... 67
4.2 ARMENIAN DIASPORA IN THE CONTEXT OF MIGRATION & DEVELOPMENT ........................ 70
4.3 STATE POLICIES ON MIGRATION AND DIASPORA INITIATIVES – TENTATIVE
CONCLUSIONS ..................................................................................................................................................... 72
4.4 INTERNATIONAL LABOUR MIGRATION AND DIASPORA POLICIES IN SELECT
COUNTRIES OF ORIGIN ................................................................................................................................... 73
CONCLUSIONS AND RECOMMENDATIONS FOR MEANINGFUL POLICY MEASURES AIMED AT
ENHANCING THE DEVELOPMENT IMPACT OF MIGRATION AND MITIGATING ADVERSE
CONSEQUENCES ................................................................................................................................................. 79
ANNEXES ................................................................................................................................................................ 85
ANNEX 1 TO CHAPTER 1: FOCUS GROUPS WITH RETURNEES ......................................................................... 85
ANNEX 2 TO CHAPTER 1: CASE STUDIES ......................................................................................................... 89
ANNEX 1 TO CHAPTER 2: LIST OF COMPANIES INTERVIEWED ......................................................................... 97
ANNEX 2 TO CHAPTER 2: FOCUS GROUPS WITH YOUNG GRADUATES ............................................................. 99
BIBLIOGRAPHY .................................................................................................................................................. 106

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EEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

Research Overview
The effective governance of labour migration entails making migration work better for
development, enhancing possible benefits such as financial flows, technology transfer and
entrepreneurship, and mitigating negative consequences such as loss of skilled human resources.
While there have been studies concerning Armenia on labour migration and remittances, this was
the first study in the framework of migration and development.
The study looks at four interrelated issues: a) labour migration and return, b) emigration of skilled
human resources, c) response of the Armenian education system to signals from local and
global labour markets and d) Armenian policies and international best practices for enhancing
the development potential of migration. The subject of remittances to Armenia and how its
development impact can possibly be enhanced through mobilisation of savings and investment
is examined in a complementary study concurrently commissioned by ILO.
The findings and conclusions of the research are based on primary and secondary data. The
primary data was collected through focus groups, structured and semi-structured interviews with
returnees, major Armenian employers, young graduates, representatives of education system,
Diaspora organizations, and key players in the Armenian migration field. The findings of previous
researches on Armenian migration, and official statistics on the Armenian labour market, external
migration processes, and education, were used as secondary sources.

Main findings
Labour migration and return
The latest data acquired through the Returnee Survey 2008, commissioned by the OSCE Office
in Yerevan, confirmed that in the period between 2002 and 2007 labor migrants dominated the
external migration flows from Armenia. In the specified period of time, labor migrants
constituted 94% of all migrants, while only 3% left Armenia with a purpose to permanently
reside abroad, and 2% had an intention to study abroad. This is to say that the situation has
significantly changed since the beginning of 90’s when, due to the economic and social
dislocation, between 800,000 and 1,000,000 people have permanently emigrated from
Armenia and joined the sizeable Armenian Diaspora in Russia, Ukraine, USA and countries of
Western and Eastern Europe.
Annually, about 60,000 labor migrants go to seek jobs in Russia, mainly in the construction
industry. As a matter of rule, these migrants return to Armenia to visit their families at least
once a year. They do not wish to relocate their families to Russia to settle there permanently.
At the same time, they do not want to return to Armenia permanently, because they cannot
find decent employment that would pay sufficiently to sustain their families. Should they
however be able to find such an employment, they would be ready to return to Armenia
permanently.
As for the returnees, since 2002 about 55,000 migrants have returned to Armenia and decided
not to leave for abroad, at least in 2008. The biggest group among the permanent returnees are
temporary labor migrants who decided to discontinue their engagement in labor migration. A
smaller group of returnees are those who migrated in 1990s “permanently” but have moved
back to Armenia since 2002.
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The study revealed that in general, the competitiveness of returnees in the domestic labour
market, as well as their average monthly salary is increased if compared with regular
employees. However, while returnees have a positive influence on the hiring company in terms
of skills and technology transfer, their contribution to the origin country in terms of investment,
job creation and business development appears to be limited. This should alert policy-makers
on exploring possible ways to enhance the development potential of return.

Emigration of skilled human resources
The results show that for many professional groups there is a mismatch between the supply
and demand of the labor force in Armenia. More often than not, the Armenian labor market
simply cannot absorb the labor which is available at the labor market. At times it seems there
are too many specialists in a given professional group (such as Economics and Management, or
Humanities and Social Sciences). Very often, however, the qualifications of graduates of Soviet
education institutions are no longer needed by the employers, and young graduates of
Armenian secondary specialized and tertiary education are equally not equipped by the
necessary set of skills.
Currently, the most demanded specialists in the Armenian labor market are construction
specialists and programmers. The employers of construction and IT industries are most worried
about the recruitment of skilled labour. In the case of IT specialists, the problem seems to
narrow down to an insufficient quantity of highly skilled specialists trained in Armenia.
Whereas the construction industry suffers most from the emigration of skilled labour to Russia.
Regarding the impact of outmigration in general, and that of skilled workers in particular, on
Armenia’s development, it can be concluded that the impact is most likely mixed. The high
unemployment data in Armenia suggest that the migrants, who were unemployed in Armenia,
are not a net loss to the Armenian economy, though this may change over time. For example,
as certain industries develop in Armenia, they may start lacking specialists that have migrated
abroad. So far, with the exception of the construction sector, it does not seem that the
absence of skilled workers in Armenia leads to lower quality and/or quantity of output.
It is recognized that migration of excess labor force helped to relieve some of the pressures.
Yet, Armenian migration is not clearly embedded in the “virtuous migration circle” in which
workers who would have been unemployed at home find jobs abroad, send home remittances
that reduce poverty, and are invested to accelerate economic and job growth, and return with
new skills and technologies that lead to development of new industries and jobs.

The response of the Armenian education system to signals from local and
global labour markets
The research shows that, in spite of plans to further develop and reform Armenia’s professional
education system in such a way as to align it as closely as possible with the international
standards, both public and private vocational and tertiary education institutions have still not
adequately responded to the needs of not only the international, but even the local labor
market in terms of quantitative criteria, structure, or qualitative features (including the
teaching of foreign languages and the delivery of IT skills). To a certain extent, it is due to the
scarcity of financial resources, problems in the legal framework, the outdated and depleted
facilities and laboratories, and finally, faculty shortages and qualification issues.

2
Armenian policies and international best practices of enhancing the
development potential of migration
No policies or mechanisms have been formulated in Armenia so far to attract investment, skills
and technology transfer from migrants, or to facilitate the return of skilled migrants on a
temporary or long term basis. With regards to labour migration, in contrast with the past, there
seem to be an important external factor, namely the European Neighborhood Initiative that
could positively influence the elaboration of Armenian migration policies. As Armenia develops
(in the framework of the European Neighbourhood Policy) a National Action Plan on Migration
and Refugee Issues, this could reinvigorate the discussion on migration policy settings in
Armenia, and mitigate some of the tensions between various actors. It could put migration and
development more strongly on the development agenda.
Compared to countries in the region, or even globally, policies and mechanisms to mobilize
diaspora support for development in Armenia, is relatively advanced. This is as much, if not
more, as a result of the motivation and efforts of the diaspora itself. The establishment of the
new Ministry for Diaspora Affairs should lead to better coordination of diaspora initiatives.
Governments such as those of Germany, Russia and Kazakhstan have policies to
encourage/facilitate return and settlement of compatriots. The Philippines has programmes for
the reintegration of labour migrants funded by receipts from a Migrant Welfare Fund. Both the
governments of India and the Philippines have mechanisms for the temporary return and
placement of scientific personnel. The return of qualified programmes has been implemented
globally by the International Organization for Migration (IOM) for a number of years facilitating
both long term and short term return. This has been done in respect of Africa, and in post
conflict zones (Iraq and Afghanistan). Taiwan has had one of the most comprehensive reverse
brain drain programmes, and its 1990 census indicated that around 50,000 highly skilled
expatriates returned to Taiwan during the 1985-90 period (Hugo, 2003).

Recommendations
The main recommendation of the study in the area of labour migration and return in terms of
the institutional framework is to designate a lead ministry for its governance and then establish
an inter-ministerial commission for coordination.
Secondly, more resources need to be allocated for the lead ministry to properly carry out its
mandate. This is not unreasonable considering labour migrants produce the largest financial
inflow that the country sees. More resources need to be invested by the government into
support services to protect the labour and human rights of migrant workers abroad.
Thirdly, with the support of international donors, diaspora and the private sector, mechanisms
should be developed to provide opportunities for returnees and migrants to contribute their
skills and expertise.
As Armenia consciously reaches out to its diaspora , it is good to have a typology that outlines
conceptually the various types of resources, and the means to tap them. Diaspora investment
can be soft, (in the form of knowledge resources) and/or hard, (in the form of financial
resources). The latter, in turn, can cover remittances or private transfers, portfolio or financial
investment, sectoral or targeted business investment and/or director general business
investment. The quest to mobilize diaspora resources requires measures to stimulate all these
types of investments.
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As the required and available knowledge covers a wide spectrum, several tracks along which
the knowledge- sharing and transfer can be facilitated can be identified.
The first track of knowledge resources concerns the resources to be leveraged under a
vocational training programme (VETP). Components like training and reskilling, capacity-
building in SMEs, finishing schools, entrepreneurship development, etc. are ideally suited for
diaspora participation and investment. The business model can allow both the diaspora’s own
personal expertise and outsourced expertise put together/managed by the diaspora. The latter
option will bring in diaspora entrepreneurship as well.
A second track can be developed on the assumption that the Armenian diaspora is well placed
in academics circles, and can get increasingly involved in collaborative R&D projects in their
home countries. To achieve this, the authorities concerned can launch a Brain Bank Scheme
(BBS) to provide for on-line registration and give it great publicity. BBS could seek proposals for
collaborative R&D from the diaspora as per their interests and priorities. The essential point is
that through such ventures spawned by the diaspora, Armenia can hope to become a
recognized R&D centre in the region. Members of the diaspora academic community can also
be co-opted as members of advisory panels.
The financial resources of the diaspora materialize through one of three modes. The first is
through remittances. Remittances are in the nature of private transfers, and are accounted for
as such in Balance of Payments (BoP) accounting. The second is through what is commonly
called portfolio investment, mainly in equity and debt instruments traded on the stock
exchange. The third is direct investment in starting new businesses. In the context of mobilizing
the Armenian diaspora, all these three modes are important.
Portfolio investment refers normally to investments in equity and debt instruments through the
capital market. The narrow breadth and depth of the local stock market is a limiting factor. The
absence of a vibrant Mutual Fund (MF) industry is another possible constraint. A possible way
out is to step up the range of products offered to diaspora investors. The diaspora is a
significant force whose savings can and need to be tapped. “Personal Wealth/ Investment
Management” services can be offered to them more aggressively. Trading in regional/overseas
securities and MFs can be encouraged.
Investments in bank deposits are another means of resource flows from the diaspora, driven by
interest rate differentials and expectations on interest and exchange rate movements. If these
are not carefully calibrated, there is possibility of arbitrage and speculation. Given their
medium-term BoP outlook, Armenia can take a call on whether they want to make a play for a
steady flow of diaspora deposits to buttress their current account and if so, at what
incremental cost. One practical way to test the waters is to advise banks to come up with
attractive pilot schemes with competitive returns net of inflation and depreciation to attract
the diaspora.
The Armenian diaspora is heterogeneous, comprising the old and the new diasporas. The
strategy to attract investments from the diaspora should be refined to offer differentiated
options to distinct segments of the diaspora. The contacts of the diaspora could also be used to
project Armenia as a regional investment destination for R&D, contract research, outsourcing,
etc. This calls for a concerted marketing drive that can highlight the comparative advantages of
Armenia. Obviously, such a campaign has to be led by the Government agencies.
4
IINNTTRROODDUUCCTTIIOONN
A survey of external migration processes in Armenia for 1991-1998 estimated net emigration during the
period at 760-780,000 persons (Ministry of Statistics/TACIS 1999).This amounts to almost 20% of the
population at independence (in 1991). Net emigration has however sharply fallen since the peak in
1992-94. A survey by OSCE for the period 2002-2005 found that almost 90% of labour migrants surveyed
went to Russia. Over 40% had Moscow as the destination. In addition to labour migrants, there is a large
Diaspora of Armenian origin particularly in the USA, France and Lebanon.
Armenian migrants make an enormous contribution to the economies of host and origin countries. The
amount of remittances sent home by migrants from Armenia through official channels is over US$ 1
billion million or 19% of GDP in 2006 (World Bank). The UN High-level Dialogue on International
Migration and Development in September 2006, and Global Forum on Migration and Development a
year later, have recognized the nexus between migration and development. The effective governance of
labour migration entails making migration work better for development, enhancing possible benefits
such as financial flows, technology transfer and entrepreneurship and mitigating negative consequences
such as loss of skilled human resources.
While there have been studies concerning Armenia on labour migration and remittances, this is the first
study in the framework of migration and development.
From a study of migration statistics, secondary sources, a returnee survey commissioned by OSCE and
case studies, the research describes the characteristics of external migration, including the volume of
labour emigration, its nature (temporary, seasonal or permanent), the countries of destination, the
profile of labour migrants, occupations in countries of destination; incidence of temporary or permanent
return, profile of returnees and contribution in terms of job creation and technology transfer.
Furthermore, the research examines the demand and supply of skilled workforce in Armenia, and
reflects on the causes and consequences of emigration of skilled human resources. The research also
looks at the changes that have taken place in the Armenian education system in terms of quantity and
quality of education offered, international accreditation and certification, language skills, private sector
response and allocation of resources by the State.
The research reviews the current policies to attract investment, savings, technology transfer from
migrants, and policies for the return of qualified, makes a typology of Diaspora initiatives, as well as
containing a description of effective practices that have been developed internationally, particularly in
Asia. The concluding chapter of the report offers recommendations for meaningful policy measures
aimed at enhancing the development impact of migration and mitigating adverse consequences. The
subject of remittances to Armenia and how its development impact can possibly be enhanced through
mobilisation of savings and investment is examined in a complementary study concurrently
commissioned by ILO.
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